Claiming Both Liquidated Damages And Risk Purchase Costs: A Myth Or A Reality?

I. INTRODUCTION

This article attempts to address a common issue which arises in disputes arising from breach of commercial contracts executed by and between the Principal Employer and the Contractor. In this era of rapid growth and development, timely execution of commercial contracts is of utmost importance. However, in course of performance of contracts, breaches by one party to the prejudice of the other party is also inevitable. Such breach calls for financial compensation to the affected/ aggrieved party for loss or injury by the party in breach in the nature of "damages".

Generally speaking, in case of breach of contract, a sum is awarded to restore the affected party to the economic position the parties expected to be in upon due and proper execution/ performance of the contract. However, it is not practically possible or viable to award damages in such manner and apply it as a straitjacket formula irrespective of the provisions of the contract. The affected